Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. 

Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 

303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email 

corrections@akcourts.us. 

THE SUPREME COURT OF THE STATE OF ALASKA 

ALASKA AIRLINES, INC.; EBERLE 

VIVIAN, INC.; AIGA, as successor in 

interest to LUMBERMEN’S 

INSURANCE COMPANIES; and 

NORTHERN ADJUSTERS, INC., 

Appellants and 

Cross-Appellees, 

v. 

PAMELA DARROW, 

f/k/a/ PAMELA CREEKMORE, 

Appellee and 

Cross-Appellant, 

and 

STATE OF ALASKA, DEPARTMEN

OF LABOR & WORKFORCE 

DEVELOPMENT, DIVISION OF 

WORKERS’ COMPENSATION, 

Intervenor and 

Cross-Appellee. 

T 

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) Supreme Court Nos. S-16127/16143 

Alaska Workers’ Compensation 

Appeals Commission No. 14-024 

O P I N I O N 

No. 7192 - August 25, 2017 

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Appeal from the Alaska Workers’ Compensation Appeals 

Commission. 

Appearances: Richard L. Wagg, Russell Wagg Meshke & 

Budzinski, Anchorage, for Appellants/Cross-Appellees. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J. John Franich, Franich Law Office, LLC, Fairbanks, for 

Appellee/Cross-Appellant. Kimberly D. Rodgers, Assistant 

Attorney General, Anchorage, and James E. Cantor, Acting 

Attorney General, Juneau, for Intervenor/Cross-Appellee 

State of Alaska. 

Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, 

and Carney, Justices. 

CARNEY, Justice. 

I. INTRODUCTION 

An employee continued to work for over ten years after a job-related knee 

injury but had multiple surgeries on her injured knee. Over time, her employer made 

several permanent partial impairment payments, and she was eventually determined to 

be permanently and totally disabled because of the work injury. She began to receive 

Social Security disability at about the same time she was classified as permanently and 

totally disabled for workers’ compensation. 

Her employer asked the Alaska Workers’ Compensation Board to allow 

two offsets to its payment of permanent total disability (PTD) compensation: one related 

to Social Security disability benefits and one related to the earlier permanent partial 

impairment (PPI) payments. The Board established a Social Security offset and 

permitted the employer to deduct the amount of previously paid PPI (adjusted for 

inflation). 

The employee appealed to the Alaska Workers’ Compensation Appeals 

Commission, arguing that the Board had improperly applied one of its regulations in 

allowing the PPI offset and had incorrectly calculated the amount of the Social Security 

offset. She also brought a civil suit against the State challenging the validity of the 

regulation. The State intervened in the Commission appeal; the lawsuit was dismissed. 

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The Commission reversed the Board’s calculation of the Social Security offset and 

affirmed the Board’s order permitting the PPI offset. The employer appealed the 

Commission’s Social Security offset decision to this court, and the employee crossappealed the PPI offset. We affirm in part and reverse in part. 

II. FACTS AND PROCEEDINGS 

PamelaDarrowworkedforAlaskaAirlines attheFairbanks airportin 1996. 

While working, she suffered a knee injury that required multiple surgeries and ultimately 

led to her becoming permanently and totally disabled. Darrow held other jobs in the 

years following the 1996 injury, and Alaska Airlines paid her temporary total disability 

(TTD) during times she was unable to work because of her injury. Alaska Airlines also 

made four payments for PPI for a total of $40,500.1 The last payment was made in 2005. 

In 2012 the Social Security Administration decided Darrow met its 

standards for disability related to her knee, found her disabled as of December 2010, and 

determined that her first month of eligibility for benefits was June 2011. In January 2013 

Darrow filed a written workers’ compensation claim for PTD benefits and an adjustment 

of her disability compensation rate.2 She was receiving TTD at the time and was in the 

reemployment process.3 

1 PPI is calculated by multiplying the percentage of an injured worker’s 

permanent impairment by a fixed amount. AS 23.30.190(a). At the time of Darrow’s 

injury, the fixed amount was $135,000. Former AS 23.30.190(a) (1996). Using the 

medical reference named in the statute, Darrow’s doctor ultimately rated Darrow as 

having a 30% whole person impairment. 

2 When a worker is permanently and totally disabled, AS 23.30.220(a)(10) 

permits the Board to base compensation on a wage rate the employee could earn during 

the period of disability rather than what she earned before the injury. 

3 The reemployment process, which helps to prepare an employee to return 

(continued...) 

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AlaskaAirlines initially objectedtoher reclassification, but later agreedshe 

was permanently and totally disabled. It objected to the compensation rate adjustment 

and noted it might be entitled to an offset for Darrow’s Social Security disability (SSDI) 

under AS 23.30.225(b).4 Alaska Airlines later petitioned the Board to allow it two 

offsets: one for SSDI and another one, pursuant to AS 23.30.180, for the PPI it had paid 

earlier.5 

During Darrow’s 2014 deposition Alaska Airlines learned that she had also 

been working for the State of Alaska at the time of her injury, which affected her 

compensation rate.6 The parties later entered into a partial settlement in which they 

agreed that: (1) Darrow’s “average weekly wage” when the injury occurred was 

$668.98, rather than $270 as the adjuster had initially calculated;7 (2) she became 

3 (...continued) 

to work in a different job when she can no longer return to her former one, is set out in 

AS 23.30.041. 

4 AlaskaStatute23.30.225(b) authorizes anoffset to an employer’s disability 

payments when an employee gets both workers’ compensation and SSDI for the same 

injury. 

5 Alaska Statute 23.30.180 provides in part, “If a permanent partial disability 

award has been made before a permanent total disability determination, permanent total 

disability benefits must be reduced by the amount of the permanent partial disability 

award, adjusted for inflation, in a manner determined by the board.” 

6 Pursuant to AS 23.30.220(a)(7), “when the employee is working under 

concurrent contracts with two or more employers, the employee’s earnings from all 

employers is considered as if earned from the employer liable for compensation.” 

7 The partial settlement indicated that the average weekly wage was 

“computed under the 1996 version of AS 23.30.220(a)(4)(A)” and that the initial 

calculation “did not take into account” Darrow’s concurrent employment with the State. 

No records were available to show how the adjuster at the onset of the case determined 

(continued...) 

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disabled for purposes of the Alaska Workers’ Compensation Act (Act) on October 8, 

2012; (3) Alaska Airlines would pay Darrow an additional $15,000 related to penalties 

and interest “in satisfaction of all claims prior to March 8, 2012”; and (4) Darrow’s 

attorney would receive “minimum statutory fees on all previously disputed benefits.” 

They listed four unresolved issues in the partial settlement: one related to the Board’s 

exerciseofdiscretion under AS23.30.220(a)(10) to determineawageratefor calculating 

Darrow’s PTD amount,8 one regarding the percentage of PTD that could be withheld for 

any overpayment, and the two raised in this appeal. 

The Board held a hearing in August 2014; because the contested issues 

were primarily legal, no witnesses testified. Darrow argued that, contrary to Alaska 

Airlines’ assertion, AS 23.30.180 did not permit Alaska Airlines to offset the amount of 

PPI it had previously paid her because the statute authorized an offset for permanent 

partial disability rather thanpermanent partial impairment. 

9 Although aBoardregulation 

7 (...continued) 

the average weekly wage. The applicable subsections of the 1996 version of 

AS 23.30.220(a) used the phrases gross weeklyearnings and spendableweeklywage, see 

former AS 23.30.220(a) (1996), but the parties referred to the average weekly wage in 

the partial settlement. 

8 Alaska Statute 23.30.220(a)(10) permits the Board to “determine gross 

weekly earnings by considering the nature of the employee’s work, work history, and 

resulting disability” when an employee is PTD and the Board decides that the amount 

of gross weekly earnings under other statutory subsections “does not fairly reflect the 

employee’s earnings during the period of disability.” The amount of compensation is 

tied to an employee’s gross weekly earnings. AS 23.30.175, .180, .185, .200, .220(a). 

Alaska Airlines later agreed with Darrow’s calculation of $1,390 as her adjusted average 

weekly wage under subsection .220(a)(10). Counsel told the Board the figure was based 

on a vocational expert’s report. 

9 Compare AS 23.30.190(a) (providing for compensation “[i]n case of 

(continued...) 

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provided that “[f]or purposes of (b) of this section and AS 23.30.180, permanent partial 

disability benefits include permanent partial impairment benefits paid under 

AS 23.30.190,”10 Darrow contended the regulation was against legislative intent. She 

asked the Board to adopt the reasoning of Miller v. Municipality of Anchorage, in which 

the Board based an offset on the worker’s adjusted weekly wage,11 when calculating the 

SSDI offset. Under Darrow’s analysis, Alaska Airlines would not be entitled to an SSDI 

offset because the offset calculation resulted in a negative number. 

Alaska Airlines argued first that it was entitled to an SSDI offset based on 

Darrow’s actual wages in 1996 rather than the amount it had agreed to as an adjusted 

wage under AS 23.30.220(a)(10). It contended that the statement in Underwater 

Construction, Inc. v. Shirley that the phrase average weekly wages in AS 23.30.225(b) 

was “the same as ‘gross weekly earnings’ in AS 23.30.220(a)(1)”12 meant that only 

AS 23.30.220(a)(1) could be used to establish gross weekly earnings. Alaska Airlines 

maintained that the purpose of AS 23.30.225 was to save the employer money and that 

the way to effectuate this purpose was to calculate the offset using Darrow’s actual 1996 

9 (...continued) 

impairment partial in character but permanent in quality, and not resulting in permanent 

total disability”), with AS 23.30.180(a) (requiring reduction of PTD by “the amount of 

the permanent partial disability award, adjusted for inflation”). 

10 8 Alaska Administrative Code (AAC) 45.134(c) (2011). 8 AAC 45.134(b) 

provides, “In accordance with AS 23.30.155(j), the employer may reduce permanent 

total disability benefits to recover permanent partial disability benefits previously paid 

by the employer for the same injury.” 

11 AWCB Dec. No. 13-0099 at 27, 2013 WL 4508816, at *20 (Aug. 20, 

2103). 

12 884 P.2d 150, 154 (Alaska 1994). 

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wage, even though Darrow would get less money in combined SSDI and PTD than she 

would get in PTD alone under this proposal.13 

Alaska Airlines acknowledged that AS 23.30.180provided for an offset for 

permanent partial disability (PPD) rather than PPI. But it argued that in enacting 

AS 23.30.180, the legislature intended “to avoid double payment for injuries” that cause 

first a permanent impairment and later a permanent total disability. Alaska Airlines 

pointed out that AS 23.30.190(a), the statute authorizing PPI, directs payment of PPI 

only when the partial impairment does not “result[] in permanent and total disability.” 

It argued that if an employee was paid PPI and later became permanently and totally 

disabled, the employer should get a credit for the previously paid PPI as an advance 

payment of PTD. Alaska Airlines cited several Board decisions that allowed an offset 

for PPI when a claimant received PTD, and maintained that the Board’s regulation 

“equat[ing] permanent and partial disability with permanent and partial impairment” 

required the Board to consider the terms synonymous. 

In its decision the Board adopted the approach used in Miller, but its 

application of Miller did not give Darrow the outcome she wanted.14 Instead, the 

Board’s result when it calculated the SSDI offset was the same as Alaska Airlines’ 

proposal. When it turned to the PPI offset, the Board referred to the legislative history 

of the 1988 amendments to the Act that replaced permanent partial disability with 

permanent partial impairment. It also quoted from Larson’s Workers’ Compensation 

13 Under Alaska Airlines’ calculation of the SSDI offset, Darrow would 

receive $535.18 a week in combined SSDI and PTD instead of $668.98 in PTD alone. 

14 In applying Miller, the Board limited Darrow’s adjusted wages under 

AS 23.30.220(a)(10) to $668.90. As the Commission pointed out, this was erroneous. 

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Law to explain the differences between impairment and disability in compensation.15 

The Board concluded that the legislature intended to change the partial impairment 

benefit under the Act to “a physical impairment benefit” rather than a disability benefit; 

it therefore concluded that payment of both PPI and PTD would not result in Darrow 

receiving duplicate compensation for the same loss. The Board did not think Alaska 

Airlines should be entitled to an offset for PPI according to statute, but it allowed the 

offset because it considered itself bound by its own regulation stating that “[f]or purposes 

of . . . AS 23.30.180, permanent partial disability benefits includes permanent partial 

impairment benefits paid under AS 23.30.190.”16 The Board adjusted the PPI amounts 

for inflation, denied Alaska Airlines’ request to withhold more than 20% of benefits to 

recoup the overpayment, and denied both interest and further attorney’s fees to Darrow. 

Darrow appealed to the Commission, challenging the Board’s decision 

regarding both offsets. She also filed suit in the superior court challenging the Board’s 

regulation, evidently contending that it was not consistent with the statute.17 The director 

of the Division of Workers’ Compensation intervened in the Commission appeal for 

purposes of addressing the regulatory issue. The lawsuit was stayed and, according to 

the State, later dismissed. 

The Commission reversed the Board’s calculation of the SSDI offset and, 

using a different legal analysis, decided the PPI payments could be recouped under a 

different part of the Act. The Commission calculated the same amount as Darrow for the 

15 The Board looked to 6 ARTHUR LARSON ET AL., LARSON’S WORKERS’ 

COMPENSATION LAW § 80.05 (Matthew Bender, Rev. Ed. 2015). 

16 8 AAC 45.134(c). 

17 The record contains no pleadings from the court case. 

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SSDI offset, even though its analysis was somewhat different from hers.18 Under the 

Commission’s analysis, the average weekly wage the parties agreed to under 

AS 23.30.220(a)(10) was the average weekly wage to be used in calculating the offset. 

It noted Alaska Airlines’ argument that the statutory language of AS 23.30.225(b) said 

“average weekly wages at the time of injury.” But it interpreted the legislature’s 1995 

amendment of AS 23.30.220(a)19 to include wages calculated under any subsection of 

AS 23.30.220(a), including subsection .220(a)(10), within the definition of average 

weekly wages under AS 23.30.225(a). The Commission thought that to interpret the 

statute otherwise would lead to an unfair result: Darrow would receive less in combined 

SSDI and PTD than she would in PTD alone. The Commission observed that the 

statutory language permitted an offset, but that Alaska Airlines’ argument would result 

in a reduction of total benefits. 

Next the Commission decided that Darrow’s PPI did not now meet the 

terms of AS 23.30.190(a) — “impairment partial in character but permanent in quality, 

and not resulting in permanent total disability” — and thus the earlier PPI payments were 

effectively an advance payment of PTD. It allowed Alaska Airlines to offset the PPI 

amountunder AS23.30.155(j),20 andordered that “AlaskaAirlinesis entitled to withhold 

20% of [Darrow’s] permanent total disability payments, without regard to AS 23.30.180 

18 The parties also disputed howtheBoardshould apply the maximumbenefit 

cap, but neither party has raised that issue before us. We therefore do not address it. 

19 This amendment added subsection .220(a)(10) and allowed the Board 

discretion to vary gross weekly earnings when an employee was eligible for PTD. 

Ch. 75, § 9, SLA 1995. 

20 Alaska Statute 23.30.155(j) permits an employer to offset overpayments or 

advance payments “by withholding up to 20 percent . . . of unpaid installments of 

compensation.” 

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and without regard to 8 AAC [45].134.” It did not address whether the amount of PPI 

to be withheld should be adjusted for inflation,21 and it decided it lacked jurisdiction to 

determine whether 8 AAC 45.134 (c) was valid. 

Alaska Airlines appeals, and Darrow cross-appeals. 

III. STANDARD OF REVIEW 

In an appeal fromtheAlaskaWorkers’CompensationAppealsCommission 

we review the Commission’s decision rather than the Board’s.22 We apply our 

independent judgment to questions of “statutory interpretation requiring the application 

and analysis of various canons of statutory construction.”23 “We exercise our 

independent judgment in determining the validity of an administrative regulation . . . .”24 

“Regulations are presumptively valid and will be upheld as long as they are ‘consistent 

with and reasonablynecessary to implement thestatutes authorizing [their] adoption.’ ”25 

21 AlaskaStatute23.30.155(j) doesnot mention adjustingearlier paymentsfor 

inflation as AS 23.30.180 does. 

22 Humphrey v. Lowe’s Home Improvement Warehouse, Inc., 337 P.3d 1174, 

1178 (Alaska 2014) (citing Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska 

2010)). 

23 ARCTEC Servs. v. Cummings, 295 P.3d 916, 920 (Alaska 2013) (quoting 

Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903-04 (Alaska 

1987)). 

24 Lauth v. State, 12 P.3d 181, 184 (Alaska 2000) (citing Bd. of Trade, Inc. 

v. State, Dep’t of Labor, Wage & Hour Admin., 968 P.2d 86, 89 (Alaska 1998)). 

25 State, Bd. of Marine Pilots v. Renwick, 936 P.2d 526, 531 (Alaska 1997) 

(alteration in original) (citation omitted) (quoting Chevron U.S.A. v. LeResche, 663 P.2d 

923, 927 (Alaska 1983)). 

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IV.	 DISCUSSION 

A.	 The Commission Correctly Calculated The Social Security Disability 

Offset. 

The main question presented by the lead appeal is the proper method of 

calculating an offset for Social Security disability (SSDI) payments when the amount of 

permanent total disability (PTD) paid is based on income calculated under 

AS23.30.220(a)(10). This question requires considerationoftwostatutes,AS23.30.220 

and AS 23.30.225. We construe statutes according to reason, practicality, and common 

sense, considering the meaning of the statute’s language, its legislative history, and its 

purpose.26 We do not strictly apply the plain meaning rule but construe statutes using a 

sliding scale approach, under which “the plainer the language of the statute, the more 

convincing contrary legislative history must be.”27 

Alaska Airlines sought an offset under AS 23.30.225(b), which provides 

that when an employee gets SSDI 

for an injury for which a claim has been filed under this 

chapter, weekly disability benefits payable under this chapter 

shall be offset by an amount by which the sum of (1) weekly 

benefits to which the employee is entitled under 42 U.S.C. 

401 – 433, and (2) weekly disability benefits to which the 

employee would otherwise be entitled under this chapter, 

exceeds 80 percent of the employee’s average weekly wages 

at the time of injury. 

Calculation of an offset thus depends on the following amounts: weekly SSDI, weekly 

workers’ compensation benefits, and “the employee’s average weekly wages at the time 

26 Louie v. BP Expl. (Alaska), Inc., 327 P.3d 204, 206 (Alaska 2014) (citing 

Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003)). 

27 Bartley v. State, Dep’t of Admin., Teachers’ Ret. Bd., 110 P.3d 1254, 1258 

(Alaska 2005) (quoting Alaskans for Efficient Gov’t Inc. v. Knowles, 91 P.3d 273, 275 

(Alaska 2004)). 

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of injury.” The parties’ main dispute centered on the meaning of the phrase average 

weekly wages at the time of injury. Alaska Airlines argued that this phrase required 

using $668.98 as Darrow’s average weekly wage because that represented her wages in 

1996, the time of her injury. Darrow, in contrast, contended that $1,390, the adjusted 

weekly wage to which the parties had agreed under AS 23.30.220(a)(10), was the correct 

amount. Darrow based her argument in part on our interpretation of AS 23.30.225 and 

.220 in Underwater Construction, Inc. v. Shirley. 

28 

The Commission considered Shirley and the 1995 amendments to 

AS 23.30.220. It concluded that the average weekly wage at the time of injury could be 

calculated under any subsection of AS 23.30.220, including subsection .220(a)(10). We 

agree with the Commission. 

In Shirley the employee asked us to interpret the phrase average weekly 

wages in AS 23.30.225(b) in pari materia29 with the phrase average current earnings in 

the Social Security Act.30 We declined to do so.31 After deciding that average weekly 

wages in AS 23.30.225(b) was ambiguous, we considered the language of the Act in 

1977, when AS 23.30.255(b) was added.32 We observed that at that time average weekly 

wages was also the term used in AS 23.30.220, making the phrase “the basis for 

28 884 P.2d 150 (Alaska 1994). 

29 In pari materia is a canon of statutory construction, meaning that statutes 

relating to the same subject may be construed together, so that inconsistencies in one 

may be resolved by looking to another statute on the same subject. In pari materia, 

BLACK’S LAW DICTIONARY (10th ed. 2014). 

30 Shirley, 884 P.2d at 155. 

31 Id. 

32 Id. at 153-54. 

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computing compensation.”33 We noted that even though the legislature had changed the 

language of AS 23.30.220 in 1983, the method used to calculate a weekly wage rate in 

the 1977 and 1983 versions of the statute remained “very similar.”34 From this we 

concluded that average weekly wages in AS 23.30.225(b) was “the same as ‘gross 

weekly earnings’ in AS 23.30.220(a)(1),” the subsection used to calculate the 

employee’s compensation in that case.35 

Alaska Airlines asserts that AS 23.30.225(b)’s use of the phrase at the time 

of injury only permits the use of Darrow’s income from 1996, the year of her injury. 

This argument ignores the use of the same phrase in AS 23.30.220, which currently 

provides that compensation is calculated “on the basis of an employee’s spendable 

weekly wage at the time of injury.”36 (Emphasis added.) In spite of this language, 

AS 23.30.220(a)(10) allows the Board to set a different wage rate for certain workers 

who are permanently and totally disabled. 

Historically AS 23.30.220 has permitted the Board some discretion in 

setting the wage used as a base for compensation calculation. When AS 23.30.225(b) 

was added to the Act in 1977, for example, former AS 23.30.220 permitted the Board to 

set a worker’s average weekly wages at the time of injury by considering wages for 

33 Id. at 153 (quoting former AS 23.30.220 (1977)). 

34 Id. at 153-54 (quoting former AS 23.30.220(2) (1977) and former 

AS 23.30.220(a)(1) (1983)). 

35 Id. at 154. We also observed that the version of AS 23.30.220 in effect 

when Shirley was injured was unconstitutional. See id. at 151 n.2 (citing Gilmore v. 

Alaska Workers’ Comp. Bd., 882 P.2d 922 (Alaska 1994)). 

36 Spendable weekly wages are based on gross weekly earnings and serve as 

the basis for calculating compensation under the Act. See AS 23.30.220(a). 

AS 23.30.220(a)(10) allows the Board to vary an employee’s gross weekly earnings 

when an employee is PTD, which changes the amount of compensation. 

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similar jobs if the Board did not think wages could be “fairly calculated” under other 

subsections.37 And the same legislation that adopted the SSDI offset included a 

provision that “the average weekly wage is that most favorable to the employee,” 

considering the wages an employee had earned in the previous three years.38 These 

variations in permissible calculations of a worker’s “average weekly wage . . . at the time 

of the injury”39 suggest that the legislature understood and intended that at times the 

wage used to calculate compensation would not be precisely the same wage that a worker 

was in fact earning at the time of the injury. 

The legislature amended AS 23.30.220 in 1995, adding 

subsection .220(a)(10), the provision the parties used to calculate Darrow’s weekly 

earnings for purposes of computing her PTD amount.40 The legislature is presumed to 

know that Shirley construed the term average weekly wages in .225(b) as meaning the 

37 Former AS 23.30.220(3) (1977). See also former AS 23.30.220(a)(2) 

(1984) (permitting Board to determine gross weekly earnings “by considering the nature 

of the employee’s work and work history” if wages could not be “fairly calculated” 

under other statutory subsection). 

38 Ch. 75, § 10, SLA 1977, codified at former AS 23.30.220(2) (1978). 

39 Former AS 23.30.220 (1977). 

40 Ch. 75, § 9, SLA 1995. This amendment was intended to address the 

constitutional issues discussed in Gilmore, 882 P.2d at 929. See Minutes, House Labor 

& Commerce Comm., Hearing on House Bill (H.B.) 237, 19th Leg., 1st Sess., No. 397­

469 (Mar. 15, 1995) (statement of Rep. Eldon Mulder, Prime Sponsor of H.B. 237). 

Discussions in hearing minutes specifically related to AS 23.30.220(a)(10) were mainly 

about expanding its use to other benefits in addition to PTD. Minutes, House Judiciary 

Comm., Hearing on H.B. 237, 19th Leg., 1st Sess., Tape 95-40, Side B No. 250-375 

(Mar. 31, 1995) (statement of Rep. David Finkelstein); Minutes, Senate Judiciary 

Comm., Hearing on H.B. 237, 19th Leg., 1st Sess., No. 555-Tape 95-28, Side B (May 3, 

1995). 

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same thing as gross weekly earnings in .220(a).41 This presumption supports the 

Commission’s conclusion that when the legislature amended the statute in 1995, “it in 

effect wrote . . . the phrase ‘as determined under AS 23.30.220(a)(1)-(10)’ into 

[AS 23.30.225(b)].” 

Alaska Airlines argues that our statement in Shirley that “[t]he general 

purpose of the bill under which AS 23.30.225(b) was enacted was to make benefits more 

affordable to employers in Alaska”42 supports its construction of the statute. It further 

contends that Darrow’s case is analogous to Louie v. BP Exploration (Alaska), Inc., 

where we recognized that the legislature chose in 1988 to lower compensation for some 

workers, even if it caused those workers hardship.43 But the legislative history of 

AS 23.30.225(b) shows that it supports the Commission’s construction of the statute, not 

Alaska Airlines’. 

Alaska Statute 23.30.225(b) was enacted in 1977 as part of Senate Bill 

(S.B.) 131, but subsection .225(b) was first introduced as a separate bill in the House.44 

Initially S.B. 131 only dealt with offsets for Social Security retirement and survivors 

41 Joseph v. State, 293 P.3d 488, 492 (Alaska App. 2012) (“[T]he legislature 

is presumed to be aware of pertinent court decisions when it amends a statute.” (citing 

Shea v. State, Dep’t of Admin., Div. of Ret. & Benefits, 267 P.3d 624, 633 n.33 (Alaska 

2011))). 

42 Underwater Constr., Inc. v. Shirley, 884 P.2d 150, 154 (Alaska 1994) 

(emphasis omitted). 

43 327 P.3d 204, 208-09 (Alaska 2014). 

44 1977 House Journal 775; House Bill (H.B.) 437, 10th Leg., 1st Sess. 

(Apr. 5, 1977), Alaska Leg. Bill File No. 33. 

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benefits;45 but the House Labor and Management Committee amended it to include the 

House bill46 because both bills related to Social Security offsets.47 

When S.B. 131 was initially introduced, the governor identified one of its 

general purposes as “making benefits more affordable” to employers,48 a purpose we 

noted in Shirley. 

49 While the House Labor and Management Committee anticipated that 

its bill would decrease workers’ compensation insurance premiums and thereby save 

employers money, those savings were to come from shifting costs to the federal 

government. The House measure was meant to take advantage of a then-existing 

“loophole”infederal lawthat permittedstates to offset workers’ compensation payments 

with SSDI when an injured worker recieved both forms of compensation, thereby 

shifting part of the cost of supporting a disabled worker to the federal government.50 One 

45 S.B. 131, 10th Leg., 1st Sess. (Feb. 4, 1977). The reduction of workers’ 

compensation related to retirement and survivors benefits is now codified at 

AS 23.30.225(a). 

46 Minutes, House Labor & Mgmt. Comm. Hearing on S.B. 131, 10th Leg., 

1st Sess., Alaska Leg. Microfiche Collection No. 89 (Apr. 26, 1977). 

47 Statement of Rep. Larry Carpenter, Tape 21 at 55:50-57:08, Hearing on 

S.B. 131 Before the House Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Apr. 26, 1977). 

48 1977 Senate Journal 203. 

49 Underwater Constr., Inc. v. Shirley, 884 P.2d 150, 154 (Alaska 1994). 

50 Statements of Rep. Larry Carpenter and Mr. Theodore Berns, Tape 21 at 

56:25-57:18, 58:14-59:40, Hearing on S.B. 131 Before the House Labor & Mgmt. 

Comm., 10th Leg., 1st Sess. (Apr. 26, 1977). According to Larson’s the federal and state 

governments have used offsets to shift costs between the Social Security and workers’ 

compensation systems. See 14 ARTHUR LARSON ET AL., LARSON’S WORKERS’ 

COMPENSATION LAW § 157.03[5] (Matthew Bender, Rev. Ed. 2015). The federal 

government ultimately “enacted legislation effectively ruling out any future adoptions 

(continued...) 

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witness told the committee that in “no case” would the proposed offset result in any 

decrease in payments to workers.51 This witness presented a report that had been 

prepared for the Municipality of Anchorage showing hypothetical examples in which an 

employer would generally pay less in workers’ compensation under the proposal.52 This 

legislative history is a stark contrast to the history we discussed in Louie, which showed 

the legislature expressly chose to lower benefits for some workers at the same time it 

increased benefits for others.53 Nothing in the legislative history of either the Senate or 

House proposals shows any intent to reduce benefits paid to injured workers; to the 

contrary, one argument in favor of the legislation was that it would give workers the 

benefit of the Social Security taxes they had paid.54 

We have recognized that workers’ compensation must balance two 

competing concerns. Wages must be calculated “to arrive at a fair approximation of [a] 

50 (...continued) 

of offsets at the state compensation end,” id., and state offsets can only be used if they 

were in effect as of February 18, 1981. 42 U.S.C. § 424a(d) (2012). Under the federal 

offset provision, combined benefits from SSDI and workers’ compensation are capped 

at 80% of the worker’s average current earnings; this provision is inapplicable to states 

with their own offset provisions. 42 U.S.C. § 424a. 

51 Statement ofTheodoreBerns, Tape21 at 59:40-59:48, Hearing on S.B. 131 

Before the House Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Apr. 26, 1977). 

52 Id. at 60:28-61:42. 

53 Louie v. BP Expl. (Alaska), Inc., 327 P.3d 204, 208-09 (Alaska 2014). 

54 Statement of Theodore Berns, Tape 21 at 58:50-59:37, Hearing on S.B. 131 

Before the House Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Apr. 26, 1977). 

Relatedly, the proposal to offset retirement benefits was capped at half of the Social 

Security benefits because the employer only contributed half the Social Security tax. 

Statement of Dick Block, Dir. of Ins., Tape CB21C5 at 13:25-14:03, Hearing on S.B. 

131 Before the Senate Labor & Mgmt. Comm., 10th Leg., 1st Sess. (Mar. 3, 1977). 

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claimant’s probable future earning capacity”55 while at the same time, benefits must not 

be too generous for fear that an injured worker will not have an incentive to return to 

work.56 The 1977 hearing testimony suggests that the offset legislation was meant to 

balance these goals: replacing enough income with enough money that an injured 

worker’s standard of living would not be dramatically reduced but keeping benefits low 

enough to provide an incentive to return to work.57 The federal Social Security offset 

provision had a similar purpose — ensuring that workers have an incentive to return to 

work and preventing the “erosion of state workers’ compensation programs.”58 But if 

an injured worker returns to work for a long time before becoming completely disabled, 

using an earlier wage to set benefits can result in hardship.59 Permitting an alternative 

method to calculate gross weekly earnings under AS 23.30.220(a)(10) ameliorates this 

55 Peck v. Alaska Aeronautical, Inc., 756 P.2d 282, 286 (Alaska 1988) 

(quoting Johnson v. RCA-OMS, Inc., 681 P.2d 905, 907 (Alaska 1984)). 

56 See Alaska Pac. Assurance Co. v. Brown, 687 P.2d 264, 273 (Alaska 1984) 

(agreeing “that theStatehas importantinterestsinavoiding disincentives to rehabilitation 

and in creating incentives for injured workers to go back to work”). 

57 Statement of Dick Block, Dir. of Ins., Tape CB21C5 at 12:30-13:03, 

Hearing on S.B. 131 Before the Senate Labor & Mgmt. Comm., 10th Leg., 1st Sess. 

(Mar. 3, 1977). 

58 Freeman v. Harris, 625 F.2d 1303, 1306 (5th Cir. 1980) (citing Hearings 

on H.R. 6675 Before the Senate Comm. on Fin., 89th Cong., 1st Sess. 252, 259, 366, 540, 

738-40, 892-97, 949-54, 990 (1965)). Evidently when the federal Social Security offset 

was repealed for several years, “data . . . showed that in the majority of the states, the 

typical worker who was receiving workers’ compensation and federal disability benefits 

actually received more in benefits than his pre-disability take-home pay.” Id. (citing 

Hearings on H.R. 6675 Before the Senate Comm. on Fin., 89th Cong., 1st Sess. 151 

(1965)). 

59 See Peck, 756 P.2d at 287-88 (construing statute to avoid an unfair result). 

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hardship. Construing the Act as Alaska Airlines requests would effectively block 

AS 23.30.220(a)(10)’s calculation of an alternative wage. 

Alaska Airlines also argues that we should consider AS 23.30.225(b) a 

more specific provision than AS 23.30.220 and urges us to apply the principle that the 

more specific statutory provision should control over the general one when the 

provisions cannot be harmonized.60 It does not explain why the provisions cannot be 

harmonized or why AS 23.30.225(b) is more specific. The Commission thought the two 

provisions could be harmonized by interpreting average weekly wages at the time of 

injury in AS 23.30.225(b) as including gross weekly earnings calculated under any 

subsection of AS 23.30.220(a). 

We agree with the Commission that the statutes can be harmonized; 

therefore the rule that specific provisions govern more general ones does not apply.61 

When the offset provision was adopted, the average weekly wage under AS 23.30.220 

did not have to correspond to the exact wage the worker was earning at the time of 

injury, yet the legislature used the same phrase in AS 23.30.225(b) that it used in 

AS 23.30.220.62 This supports the Commission’s conclusion that the two provisions can 

beharmonized. Additionally, in Shirley, weinterpreted thephrase averageweeklywages 

in AS 23.30.225(b) as “refer[ring] to the measure of historical earning capacity used to 

60 See In re Hutchinson’s Estate, 577 P.2d 1074, 1075 (Alaska 1978) 

(“[W]here one section deals with a subject in general terms and another deals with a part 

of the same subject in a more detailed way, the two should be harmonized, if possible; 

but if there is a conflict, the specific section will control over the general.”). 

61 Monzulla v. Voorhees Concrete Cutting, 254 P.3d 341, 345 n.20 (Alaska 

2011) (citing Nat’l Bank of Alaska v. State, Dep’t of Revenue, 642 P.2d 811, 817-18 

(Alaska 1982)). 

62 Former AS 23.30.220(3) (1977). 

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calculate compensation” — that is, gross weekly earnings as determined by 

AS 23.30.220.63 

Here Alaska Airlines’ construction of the statute results in Darrow getting 

less per week in combined workers’ compensation benefits and SSDI —$535.18 —than 

she would get in workers’ compensation alone — $668.98 — based upon the stipulated 

amount of $1,390 as her weekly wage. While the Commission’s interpretation does not 

give Alaska Airlines an offset as long as Darrow gets SSDI, the amount Darrow receives 

under the Commission’s analysis is still substantially less than the adjusted weekly wage 

the parties stipulated to. The Commission’s construction of the Act is consistent with 

both thepurposeof keeping an employee’s benefitsbelowwages and providing adequate 

compensation. We hold that the Commission correctly construed and applied 

AS 23.30.220(a) and AS 23.30.225(b). 

B. The Commission Erred In Allowing An Offset For PPI. 

Darrow’s cross-appeal also presents an issue of statutory construction and 

requires us to examine the legislature’s use of the terms disability and impairment in the 

context of workers’ compensation. Alaska Statute 23.30.180(a) provides in part, “If a 

permanent partial disability award has been made before a permanent total disability 

determination, permanent total disability benefits must be reduced by the amount of the 

permanent partial disability award, adjusted for inflation, in a manner determined by the 

board.” The statutory definition of disability is found in AS 23.30.395(16): “ ‘disability’ 

means incapacity because of injury to earn the wages which the employee was receiving 

at the time of injury in the same or any other employment.” 

Alaska Statute 23.30.190(a) sets out a formula for paying compensation 

“[i]n case of impairment partial in character but permanent in quality, and not resulting 

63 Underwater Constr., Inc. v. Shirley, 884 P.2d 150, 154 (Alaska 1994). 

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in permanent total disability.” To determine “the existence and degree of permanent 

impairment,” AS 23.30.190(b) requires the use of a specific medical reference, the AMA 

Guides. Nothing in AS 23.30.190 links compensation for a permanent impairment to an 

inability to earn wages. 

Before 1988, AS 23.30.190 authorized payment of permanent partial 

disability compensation, with payments based on the type of permanent injury and the 

worker’s wage-earning capacity.64 In 1988 the legislature repealed and reenacted 

AS 23.30.190, replacing permanent partial disability with permanent partial impairment 

benefits.65 At the same time, the legislature amended AS 23.30.180(a) to include the 

provision mandating reduction of PTD by the amount of previously paid permanent 

partial disability. 

66 The legislature also made both of these provisions applicable only 

to injuries that happened on or after July 1, 1988.67 

Relying principally on AS 23.30.180(a) and the regulation it had 

promulgated to implement it, 8 AAC 45.134,68 the Board permitted Alaska Airlines to 

recover the $40,500 it had previously paid Darrow in PPI, plus an additional $11,338 to 

adjust the prior awards for inflation. The Commission, in contrast, interpreted 

64 Former AS 23.30.190 (1984). 

65 Ch. 79, § 34, SLA 1988. 

66 Id. § 31. 

67 Id. § 48. 

68 8 AAC 45.134(c) provides, “For purposes of (b) of this section and 

AS 23.30.180, permanent partial disability benefits includes permanent partial 

impairment benefits paid under AS 23.30.190.” 8 AAC 45.134(b) provides, “In 

accordance with AS 23.30.155(j), the employer may reduce permanent total disability 

benefits to recover permanent partial disability benefits previously paid by the employer 

for the same injury.” 

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AS 23.30.190(a) and AS 23.30.155(j) and decided that Alaska Airlines could recover the 

PPI as an overpayment of PTD “without regard to AS 23.30.180 and without regard to 

8 AAC [45].134.” It did not mention the additional $11,338. 

Darrow argues that the Commission misinterpreted the Act by allowing 

Alaska Airlines to offset the PPI it had previously paid her against her PTD award. Her 

argument is based on statutory language: AS 23.30.180(a) requires an offset when “a 

permanent partial disability award has been made before a permanent total disability 

determination” (emphasis added) — not a permanent partial impairment award — yet 

permanent partial disability as a benefit was removed from the Act in 1988.69 Darrow 

contends that disability and impairment are distinct concepts. She points out that a 

person may be disabled from working without having a permanent impairment,70 and 

conversely, a person who has a permanent impairment may not be disabled from 

working, as illustrated by Darrow herself. Darrow maintains that the Board correctly 

recognized that PPI was intended to compensate for a separate loss related to a physical 

harm, rather than wage loss from an injury, which would be a disability benefit. 

Darrow points to a different statutory subsection, AS 23.30.041(k), which 

concernsanemployee’s eligibility for reemployment benefits,toshowthatthelegislature 

understood that PPD and PPI are in fact different. In that subsection the legislature 

explicitly differentiated between PPD and PPI.71 She concludes that AS 23.30.180 does 

69 Ch. 79, § 34, SLA 1988. 

70 For example, in Rydwell v. Anchorage School District, 864 P.2d 526, 529­

30 (Alaska 1993), the parties agreed the injured worker could not return to her former 

job even though she had a 0% impairment rating. 

71 Alaska Statute 23.30.041(k) provides in part, “If permanent partial 

disability or permanent partial impairment benefits have been paid in a lump sum before 

(continued...) 

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not authorize an offset against her PTD for PPI. Darrow argues that the Commission’s 

construction of AS 23.30.190 could permit an employer a double recovery of PPI when 

AS 23.30.041(k) had been used to suspend benefits. Both Darrow and Alaska Airlines 

currently take the position that permanent partial disability in AS 23.30.180(a) refers to 

the permanent partial benefit that existed before the 1988 statutory amendments. 

AlaskaAirlines asks us toaffirmtheCommission’s interpretation oftheAct 

allowing it to recoup PPI under AS 23.30.190(a) and .155(j). Alaska Airlines argues that 

the 1988 addition of the offset provision to subsection .180(a) “only . . . related to 

injuries occurring prior to the statutory changes . . . which changed permanent partial 

disability benefits to permanent partial impairment benefits.” Therefore, it continues, 

after the 1988 amendments to the Act, “neither the credit provision of § .180 nor the 

board’s regulation in 8 AAC 45.134(c) is required to address recovery of PPI paid when 

an employee is rendered permanently and totally disabled.” It does not mention the 

Board’s adjustment of the PPI amount for inflation or the Commission’s failure to 

address it. 

The State supports the Commission’s interpretation of the statute, arguing 

that Darrow “is not entitled to PPI benefits for her knee injury because her impairment 

resulted in permanent total disability.” The State relies on the plain meaning of 

AS 23.30.190(a) — which refers to PPI as not resulting in permanent total disability — 

and the common meaning of overpayment, but also maintains that the Board’s regulation 

is consistent with both AS 23.30.180 and .190 and “harmonizes the two statutes.” It 

contends that the concepts of disability and impairment are distinct but related, as shown 

71 (...continued) 

the employee requested or was found eligible for reemployment benefits, payment of 

benefits under this subsection is suspended until permanent partial disability or 

permanent partial impairment benefits would have ceased . . . . ” 

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by language in AS 23.30.180(a) that classifies a worker who suffers certain impairments 

as presumptively permanently and totally disabled. It argues that not requiring an offset 

would overcompensate Darrow. At oral argument before us the State postulated that, 

because both statutes took effect on the same date, the statutory language in 

AS 23.30.180(a) was a drafting error and that the legislature meant to use impairment 

rather than disability in the statutory language. 

As noted, the Commission’s decision relied solely on AS 23.30.190(a) and 

AS 23.30.155(j) to permit Alaska Airlines’ recovery of previously paid PPI and failed 

to explore the meaning of AS 23.30.180(a) and its interaction with AS 23.30.190(a). The 

Commission effectively wrote out of the statute AS 23.30.180(a)’s provision for 

recovery of previously paid PPD by saying that “Alaska Airlines is entitled to withhold 

20% of [Darrow’s] permanent total disability payments, without regard to AS 23.30.180 

and without regard to 8 AAC [45].134.” 

Alaska Airlines asks us to ignore AS 23.30.180(a), the Board’s regulation, 

and the Board’s decision applying that statute and regulation, narrowing its focus to the 

statutory subsections relied on by the Commission. Although we review the 

Commission’s decision, not the Board’s,72 when construing a statute, “we must, 

whenever possible, interpret each part or section of a statute with every other part or 

section, so as to create a harmonious whole.”73 “When a statute or regulation is part of 

a larger framework or regulatory scheme, even a seemingly unambiguous statute must 

72 Humphrey v. Lowe’s Home Improvement Warehouse, Inc., 337 P.3d 1174, 

1178 (Alaska 2014) (citing Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska 

2010)). 

73 State, Dep’t of Commerce, Cmty. &Econ. Dev., Div. of Ins. v. Progressive 

Cas. Ins. Co., 165 P.3d 624, 629 (Alaska 2007) (quoting Kodiak Island Borough v. 

Exxon Corp., 991 P.2d 757, 761 (Alaska 1999)). 

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be interpreted in light of the other portions of the regulatory whole.”74 We decline to 

ignore the relevant statutory context and consider AS 23.30.190(a) and .155(j) in 

isolation to decide whether Alaska Airlines was entitled to an offset for PPI it had 

previously paid Darrow, because that analysis ignores other parts of the statute as well 

as the Board’s regulation. 

1. Statutory language and prior interpretation of disability 

As set out above, AS 23.30.180(a) permits an offset for permanent partial 

disability when an employee later becomes permanently and totally disabled, and 

AS 23.30.190(a) allows an award of PPI “[i]n case of impairment partial in character but 

permanent in quality, and not resulting in permanent total disability.” (Emphasis added.) 

Whether the Act authorizes an employer to reduce PTD by the amount it earlier paid as 

PPI is not clear from the statutory language. 

In Rydwell v. Anchorage School District we considered the difference 

between disability and impairment in the context of reemployment benefits under 

AS23.30.041.75 Wedistinguished betweenthese two concepts, observing that“Alaska’s 

statutory scheme does not use the AMA Guides to determine disability, which requires 

a discretionary analysis considering incapacity in relation to employment potential.”76 

Instead the Act uses the AMA Guides “to provide a predictable standard for impairment, 

which measures the employee’s absolute physical capacity.”77 Because the legislature 

conditioned receipt of reemployment benefits on having an impairment, not a disability, 

74 Millman v. State, 841 P.2d 190, 194 (Alaska App. 1992), quoted in Fed. 

Deposit Ins. Corp. v. Laidlaw Transit, Inc., 21 P.3d 344, 351 (Alaska 2001). 

75 864 P.2d at 530-31. 

76 Id. at 531 (emphasis in original). 

77 Id. (emphasis in original). 

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we rejected the argument that an employee’s inability to return to a previous employment 

was a basis to find eligibility for reemployment benefits.78 And in response to a 

dissenting opinion, we pointed out that the employee might be eligible for PTD even if 

not eligible for reemployment benefits under our analysis. We noted that the AMA 

Guides “cautions against a ‘ “one-to-one” translation of impairment to disability.’ ”79 

The language of AS 23.30.180(a) and our prior construction of impairment 

do not permit the two terms, impairment and disability, to be used interchangeably. But 

that is the effect of the regulation on which the Board relied to decide this case. The 

legislature requires that “[t]echnical words and phrases and those that have acquired a 

peculiar and appropriate meaning, whether by legislative definition or otherwise, shall 

be construed according to the peculiar and appropriate meaning.”80 Alaska 

Statute 23.30.180(a) uses a specifically defined term, disability, which ties eligibility for 

that benefit to the inability to earn wages and which we have interpreted to be distinct 

from impairment. 

Alaska Statute 23.30.190(a) authorizes payment of PPI “[i]n case of 

impairment partial in character but permanent in quality, and not resulting in permanent 

total disability.” We apply common rules of grammar to construe statutory language.81 

The statutory language and sentence structure suggest that the phrase and not resulting 

in permanent total disability was intended to limit PPI to workers whose disability did 

78 Id. at 528-31. 

79 Id. at 531 (quoting id. at 532 (Compton, J., dissenting)). 

80 AS 01.10.040(a). 

81 State v. Fyfe, 370 P.3d 1092, 1099 (Alaska 2016) (citing AS 01.10.040(a); 

Emp’t Sec. Comm’n v. Wilson, 461 P.2d 425, 428 (Alaska 1969)) (construing statutory 

language in accordance with the common rules of grammar); see also Wilson, 461 P.2d 

at 428 & n.5 (citing punctuation rule from dictionary in statutory construction). 

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not fall under AS 23.30.180, which presumes that certain losses render a worker 

permanently and totally disabled.82 The phrase and not resulting in permanent total 

disability is set off with commas, indicating it is a separate, coordinate requirement for 

an injured worker to qualify for PPI.83 When Darrow was evaluated for impairment 

benefits, her impairment had to meet two distinct requirements — it had to be “partial 

in character but permanent in quality” and it could not “result[] in permanent total 

disability.” It is uncontested that Darrow met both conditions when she was found 

eligible for PPI. The statutory language does not indicate that a worker who is eligible 

for PPI when rated should be retroactively classified as ineligible for PPI if years later 

the worker becomes permanently and totally disabled. And if AS 23.30.190(a) has the 

meaning the Commission said it has, there was no need for the Board to promulgate the 

regulation it used to allow the offset in this case.84 

The provision in subsection .180(a) authorizing recovery of the amount of 

a PPD award from a PTD award was added to the Act in 1988 as part of the same 

legislation that replaced permanent partial disability compensation with permanent 

partial impairment compensation.85 Alaska Airlines’ and Darrow’s theory that 

AS 23.30.180(a) was intended to allow recovery of PPD awards made under the prior 

version of the Act has some logic because when the 1988 amendments were enacted, we 

had not considered or decided whether an employee who received PPD benefits could 

82 AS 23.30.180(a) sets out specific losses that “in the absence of conclusive 

proof to the contrary, constitute[] permanent total disability.” 

83 See BRYAN A.GARNER, THE REDBOOK:AMANUAL ON LEGAL STYLE § 1.7 

(2d ed. 2006) (discussing use of comma for separate, coordinate adjectives and adverbs). 

84 See 8 AAC 45.134 (c) (allowing an employer to reduce permanent total 

disability benefits to recover previously paid PPI). 

85 Ch. 79, §§ 31, 34, SLA 1988. 

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also receive PTD benefits.86 But as we noted in Wagner v. Stuckagain Heights, and as 

the State acknowledges here, the legislature made the 1988 amendments to the Act 

applicable “only to injuries sustained on or after July 1, 1988.”87 This restriction means 

that the provision requiring an offset for previously paid PPD cannot apply to cases in 

which the employee was already eligible for PPD benefits because that employee’s 

injury had to have occurred before the amended statutes took effect. As the State 

candidly admitted at oral argument before us, reading AS 23.30.180(a) together with the 

effective date of the amendments leads to the conclusion that the offset authorized under 

subsection .180(a) “effectively applies to no cases whatsoever” and raises the possibility 

that a drafting error of some type was made. 

Two distinct drafting errors are possible. The provision in 

subsection .180(a) could apply to PPD awards made under the previous version of the 

Act, as Alaska Airlines and Darrow contend. If that was the legislature’s intent, then it 

made a drafting error by not exempting that part of the legislation from the effective date 

in the bill.88 At oral argument before us, the State offered the alternative theory that use 

of permanent partial disability in subsection .180(a) was “a drafting mistake” — that the 

legislature “meant to say permanent partial impairment instead of permanent partial 

disability” because when the statute is “read in that light it makes perfect sense” and “it 

has meaning.” Because the statutory language is unclear, we consider the legislative 

history of the relevant parts of AS 23.30.180(a) and AS 23.30.190. 

86 Wagner v. Stuckagain Heights, 926 P.2d 456, 457-58 (Alaska 1996). 

87 Ch. 79, § 48, SLA 1988, cited in Wagner, 926 P.2d at 458 n.2. 

88 The legislature provided that some sections of the 1988 amendments to the 

Act applied to injuries that happened before July 1, 1988. See ch. 79, § 48, SLA 1988. 

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2. Legislative history 

The legislative history related to these statutory provisions yields few clues 

as to the legislature’s intent. The legislature received testimony and reports about the 

difference in the concepts of impairment and disability when it considered the change 

from permanent partial disability to permanent partial impairment.89 That legislative 

history shows some inconsistent use of the terms disability and impairment when 

referring to permanent partial compensation.90 The main reasons discussed for changing 

89 See, e.g., Governor’s Oversight Group Report on SB 322/HB 352 10-11 

(Mar. 12, 1988) (discussing difference between permanent partial benefits under old and 

new statutes), Alaska Leg. Microfiche Collection No. 5389. See also Minutes, Joint 

House & Senate Labor & Commerce Comm., Hearing on H.B. 352/S.B. 322, 15th Leg., 

2d Sess., No. 350-461 (Jan. 19, 1988) (statement of John H. Lewis), in Pat Wilson, 

AlaskaLegislativeHistory: Workers’Comp.SB322(1988)(compiled1993) (explaining 

that primary concern for people with PPD is income loss); Letter from Philip M. 

Pallenberg to Senator Tim Kelly (Jan. 11, 1988), Alaska Leg. Microfiche Collection No. 

5385 (expressing concern that impairment payment would not address effect of injury 

on ability to work). 

Our decisions before 1988 distinguished between the “whole person” 

theory of compensation and the “earning capacity” theory. See, e.g., Foster v. WrightSchuchart-Harbor, 644 P.2d 221, 222 n.2 (Alaska 1982). See also Hewing v. Alaska 

Workmen’s Comp. Bd., 512 P.2d 896, 900 (Alaska 1973) (stating that basic concept of 

Alaska workers’ compensation law is “that unscheduled partial disability awards should 

be made for economic loss, not for physical injury as such”); 6 ARTHUR LARSON ET AL., 

LARSON’S WORKERS’ COMPENSATION LAW §§ 80.02-.07 (Matthew Bender, Rev. Ed. 

2015) (discussing history and different theories of permanent partial benefits). 

90 See, e.g., H. Judiciary Comm., House CS for CS for Senate Bill No. 322 

(L&C), Sectional Analysis, § 33, 15th Leg., 2d Session (Apr. 6, 1988) (labeling section 

about permanent partial benefits “Permanent Partial Disability” but noting difference in 

concepts), in Wilson, supra note 89; see also MemorandumfromShari Kochman to Rep. 

John Sund Re: All Proposed Amendments to SB 322 in All Testimony, Amendment #12 

(Apr. 16, 1988), Alaska Leg. Microfiche Collection No. 5383 (stating that maximum 

“PPD” would be lowered). 

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the permanent partial benefit from permanent partial disability to permanent partial 

impairment were concerns about fairness in benefit levels and litigation costs related to 

unscheduled benefits.91 Neither concern is particularly relevant to the issue before us. 

The sentence in AS 23.30.180(a) at the heart of this case was added in the 

Senate Labor and Commerce Committee in February 1988,92 apparently at the request 

of the Labor-Management Task Force on Workers’ Compensation.93 A memo to the 

committee chair from the Task Force proposed inserting the exact language now in 

AS 23.30.180(a) because “[c]urrent language” made it possible for “individuals [to] 

receive both a permanent partial disability award and permanent total disability 

payments” for the same injury, which was not the intent of the Task Force.94 The memo 

does notclarify whether “[c]urrent language” referred to the pre-1988 statutory language 

or to the proposed legislation then under consideration.95 But the same committee that 

inserted the relevant language in AS 23.30.180(a) had just two days earlier also inserted 

91 Minutes, Joint House & Senate Labor & Commerce Comm., Hearing on 

H.B. 352/S.B. 322, 15th Leg., 2d Sess., Tape 1, Nos. 350-461, 666 (Jan. 19, 1988) 

(statements of John H. Lewis and Jacquelyn McClintock), in Wilson, supra note 89. See 

also Sectional Analysis of Workers’ Compensation Task Force SB 322 and HB 352, at 

9, in Sen. Labor & Commerce Comm. Files, 15th Leg., 2d Sess. (1988), Alaska Leg. 

Microfiche Collection No. 5378 (stating intent “to redistribute benefits so that those 

employees who have a greater percentage of injury receive awards commensurate with 

their injuries”). 

92 Working Draft, Committee Substitute for S.B. 332 (L&C), § 26, 15th Leg., 

2d Sess. (Feb. 19, 1988), Alaska Leg. Microfiche Collection No. 5375. 

93 Memorandum from the Labor-Mgmt. Task Force on Workers’ Comp. to 

Sen. Tim Kelly, Chair, Sen. Labor & Commerce Comm. ¶ 15 (Feb. 17, 1988), Alaska 

Leg. Microfiche Collection No. 5383. 

94 Id. 

95 Id. 

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the statutory language we construed in Rydwell, conditioning receipt of reemployment 

benefits on the existence of a permanent impairment. 

96 

Throughout the time the legislature considered the1988 amendments to the 

Act, the language in AS 23.30.190(a) that the Commission construed remained 

unchanged.97 We are aware of no legislative history supporting the Commission’s 

construction of this subsection to authorize a retroactive determination that an employee 

was never entitled to PPI. The Board recognized that the legislative history could 

support the construction of the statute Darrow advances — that the legislature intended 

to compensate injured workers for a distinct loss when it disconnected PPI from wage 

loss. The mere fact that the legislature limited receipt of PPI to those workers who were 

not permanently and totally disabled when rated does not mean the legislature intended 

to authorize the employer to recoup previously paid PPI if an employee was determined, 

years later, to be permanently and totally disabled. The compensation for impairment 

is awarded independent of earning capacity and for a different type of loss than the later 

permanent disabilitycompensation, whichdepends on aworker’sinability toearn wages. 

The State asks us to apply the rule that an agency’s longstanding 

interpretation of a statute should be given deference. But in this case the Commission’s 

construction of the statute does not rely on or support the Board’s regulation, which 

appears to be the longstanding construction to which the State refers. This difference in 

construing the statutes suggests that the Board did not interpret the Act as the 

96 Working Draft, Committee Substitute for S.B. 332 (L&C), §7, 15th Leg., 

2d Sess. (Feb. 17, 1988), Alaska Leg. Microfiche Collection No. 5375. 

97 All of the versions of S.B. 322, 15th Leg., 2d Sess., are compiled in Wilson, 

supra note 89. 

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Commission did.98 Had the Board interpreted AS 23.30.190 as the Commission did, the 

regulation would have been completely unnecessary.99 Moreover, the Board did not cite 

AS 23.30.190 as authority for the regulation.100 In addition, the Commission interpreted 

the statute using its independent judgment and ignored the regulation and its effect on 

Darrow’s case.101 Thus we see no reason why we should defer to the Board’s 

interpretation of the Act as set out in the regulation when the Commission did not and 

we review the Commission’s decision. In any event, a regulation cannot “justify a 

statutory interpretation not warranted by the statute’s own language and legislative 

history.”102 

We agree with the State that the legislature likely made a drafting error in 

1988. We faced a similar issue in State, Department of Commerce, Community & 

Economic Development, Division of Insurance v. Alyeska Pipeline Service Co., where 

the State asked us to construe a statute with specific definitions in a manner that was 

98 Alaska Administrative Code, Register 113 (April 1990). 

99 The Notice of Proposed Changes related to the regulation said, “8 AAC 

45.134 is proposed to be amended to specify how the employer may recover payment of 

permanent partial disability benefits when permanent total disability [benefits] are paid 

for the same injury, and to clarify the meaning of the term ‘permanent partial disability 

benefits.’ ” Jim Sampson, Commissioner of Labor, Notice of Proposed Changes in the 

Regulations of the Alaska Workers’ Compensation Board at 4 (Mar. 24, 1989). 

100 Alaska Administrative Code, Register 113 (April 1990). 

101 AS 23.30.180(a) together with the regulation allowed the Board to adjust 

the amount of PPI for inflation, increasing the amount Alaska Airlines could recoup by 

$11,338. 

102 Muller v. BP Expl. (Alaska) Inc., 923 P.2d 783, 792 (Alaska 1996). In 

Wagner v. Stuckagain Heights, 926 P.2d 456, 457 & n.1 (Alaska 1996), we applied 

independent judgment and de novo review to interpret former AS 23.30.180 and former 

AS 23.30.190. 

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inconsistent with those definitions.103 The separation of powers doctrine “prohibits this 

court from enacting legislation or redrafting defective statutes.”104 When the legislature 

makes a drafting error, we do not rewrite the statute.105 The statutory language in 

AS 23.30.180(a) does not authorize an employer to reduce a PTD award when an 

employee has previously received PPI. Alaska Statute 23.30.180(a) authorizes recovery 

of previously paid permanent partial disability, not impairment, benefits. The 

Commission’s construction of AS 23.30.190(a) fails to interpret that subsection in the 

context of the entire Act, including AS 23.30.180(a), and essentially eliminates the 

Board’s regulation. We therefore reverse the Commission’s decision. 

C. 8 AAC 45.134(c) Is Invalid Because It Is Inconsistent With The Act. 

Darrow’s cross-appeal asks us to consider the validity of 8 AAC45.134(c), 

which the Board applied to authorize Alaska Airlines’ recovery of previously paid PPI 

and to increase the amount Alaska Airlines was entitled to recover for the PPI by 

adjusting for inflation. Alaska Airlines does not directly address the validity of the 

regulation, arguing instead that its recovery of the overpayment does not rely on the 

regulation. The State agreed with Alaska Airlines that under the Commission’s 

construction of the statute, the regulation is not needed to recover previously paid PPI. 

But neither Alaska Airlines nor the State addressed whether PPI should be adjusted for 

inflation, as permitted by AS 23.30.180(a) and 8 AAC 45.134(c) and ordered by the 

Board. And the State did not discuss why the Board would have adopted this regulation 

103 262 P.3d 593, 597-98 (Alaska 2011). 

104 State v. Campbell, 536 P.2d 105, 111 (Alaska 1975) (citing Alaska Const. 

art. II, § 1, art. IV, § 1), overruled on other grounds by Kimoktoak v. State, 584 P.2d 25 

(Alaska 1978). 

105 Alyeska Pipeline Serv. Co., 262 P.3d at 597-98. 

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if the Commission’s construction of the statute were correct. The State argues that the 

regulation’s validity is not properly before us because the superior court case was 

dismissed and the Commission determined it did not have jurisdiction to decide this 

issue. It concludes that “no ruling on the regulation’s validity exists to support this 

Court’s appellate jurisdiction.” 

Alaska Statute 23.30.129(a) gives a party the right to appeal a decision by 

the Commission to this court rather than the superior court. This is precisely the posture 

of the case before us; we therefore have jurisdiction. The question of the regulation’s 

validity may not technically be ripe for review because the Commission correctly 

decided it lacked jurisdiction to determine a regulation’s validity and, according to the 

State, the superior court case was dismissed.106 But the parties briefed the merits of this 

issue before the Commission and this court, and our construction of the relevant statutes 

leaves no question as to the validity of 8 AAC 45.134 (c). 

Because Darrow does not challenge whether the regulation was properly 

promulgated, we consider only “whether the regulation is consistent with and reasonably 

necessary to carry out the purposes of the statutory provisions” and “whether the 

regulation is reasonable and not arbitrary.”107 “We exercise our independent judgment 

in determining the validity of an administrative regulation . . . .”108 A regulation that 

106 Cf. Nelson v. Municipality of Anchorage, 267 P.3d 636, 644 (Alaska 2011) 

(deciding that as-applied constitutional challenge was not ripe because claim had not 

been litigated before Board or superior court). 

107 Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971); see also Lauth v. 

State, 12 P.3d 181, 184 (Alaska 2000). 

108 Lauth, 12 P.3d at 184. 

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“differs substantively from the clear language of the statute” is invalid.109 Here 

AS23.30.180(a) specifies thatan employer can reducepermanent totaldisability benefits 

by the amount of previously paid permanent partial disability benefits, adjusted for 

inflation. While the State advances some policy arguments in support of the regulation, 

such a policy decision is for the legislature rather than for the Board or this court.110 

Becausetheregulation effectively rewrites AS23.30.180(a), substituting impairment for 

disability, 8 AAC 45.134 (c) is not valid. 

V. CONCLUSION 

We AFFIRM that part of the Commission’s decision reversing the Board’s 

calculation of the Social Security disability offset and REVERSE that part of the 

Commission’s decision permitting an offset for permanent partial impairment benefits. 

WethereforeREMANDthis matter to theCommission for furtherproceedingsconsistent 

with this opinion. 

109 Muller v. BP Expl. (Alaska) Inc., 923 P.2d 783, 792 n.9 (Alaska 1996); see 

also Madison v. Alaska Dep’t of Fish & Game, 696 P.2d 168, 178 (Alaska 1985) 

(holding that agency regulation was invalid because it unduly restricted subsistence 

hunting, contrary to legislative intent). 

110 Fairbanks N. Star Borough Sch. Dist. v. NEA-Alaska, Inc., 817 P.2d 923, 

926 (Alaska 1991). 

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